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‘No clarity’: Industry reacts as MoJ puts brakes on Osborne’s personal injury reforms

Law firms with substantial personal injury businesses have mixed views as the Ministry of Justice (MoJ) has put the brakes on George Osborne’s personal injury reforms.

The MP had planned to increase the small claims limit for personal injury (PI) Claims to £5,000 and abolish the right to damages for minor injuries caused by whiplash.

However, a statement released by the MoJ said: ‘The number and cost of whiplash claims remains too high, increasing premiums for ordinary motorists. We remain committed to tackling this issue, and will set out our plans in due course.’

Speaking to Legal Business Kennedys partner Ian Davies said there was no clarity around the issue, and that the resistance to the reforms didn’t come from the legal profession.

Davies said: ‘I’m not sure it’s the legal profession, its more separating that between the insurers, primarily the Association of British Insurers on the one hand and those of us who work with the defendant insurers and on the other side of the divide whether this is a good, bad or indifferent idea, is the claimant organisations. Most interested parties have very different views on it depending on their perspectives of it. Hopefully for all of us some clarity will come in the next few days.’

Qamar Anwar, managing director of PI firm First4Lawyers added: ‘We’re delighted with the government’s decision to put PI industry reform on the backburner. While it will no doubt be a huge disappointment to the insurance industry, it essentially protects access to justice for those who need it and, at a time when you can claim for a 15-minute train delay, this move makes complete sense.’

The reforms, which were announced by the then Chancellor during last year’s Autumn statement, were controversial as they sought to end the ‘compensation culture’ in the UK, but were seen by some as an all-out attack on victims for the benefit of the insurance industry.

The day after the reforms were announced Australian-listed Slater and Gordon, which makes 80% of its UK revenue from personal injury claims, saw its share value halve.

‘This will end the cycle in which responsible motorists pay higher premiums to cover false claims by others,’ the Treasury said. ‘It will remove over £1bn from the cost of providing motor insurance and the government expects the insurance industry to pass an average saving of £40-£50 per motor insurance policy on to consumers.’

Read more in the comment piece: ‘Guest post: Where now for personal injury lawyers?’